Wonkbook: On debt ceiling, Obama’s offer is this: Nothing.

January 15, 2013

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Wonkbook's Number of the Day: 80 million. That's the number of separate payments the Treasury Department makes per month. If you're trying to understand why prioritization -- in which the federal government should pick and choose which bills to pay first -- may not even be possible, that number is essential. It's not clear that it's legal for the Treasury to pick and choose between those payments. It's not clear that we can rewire our computer systems quickly enough to choose between those payments. And note that the one time America did temporarily default it was due to a...computer glitch.

Wonkblog's Graph of the Day: How members of Congress are told to spend their time.

Today in Wonkbook: Obama's tough presser on the debt ceiling; what Americans want on gun control laws; the new tone of climate science reports; HHS releases rules for Medicaid expansion; and the public policies which stand behind your investments. 

Top story: Debt ceiling goes into showdown

Obama says there will be no negotiating over debt ceiling. "President Obama vowed Monday that he would not negotiate with Republicans over the federal debt ceiling, warning that Social Security checks would be delayed and the nation could enter a new recession if Republicans do not agree to raise the limit on government borrowing...Obama said he still wanted to reach a compromise to stabilize borrowing over the long term but that willingness to negotiate does not extend to the debt ceiling, which covers obligations that Congress has already incurred." Zachary A. Goldfarb and Philip Rucker in The Washington Post.

Read: Transcript of President Obama's remarks in the news conference.

The White House has a credibility problem. "When it comes to the debt ceiling, the White House has a credibility problem. Their plan is to simply refuse Republican demands to negotiate over the debt ceiling. But for that plan to work, Republicans need to believe the White House won’t negotiate over the debt ceiling...Obama is purposefully painting himself into a corner...He’s saying he won’t negotiate over the debt ceiling so loudly, so emphatically, so clearly, and so often that he is putting his credibility on the line. If, after all this, he does indeed negotiate over the debt ceiling, the White House will lose all credibility in all negotiations going forward. That’s not something they can afford to do, and so the White House is hoping that Republicans, once they realize what Obama is doing, will realize he’s serious." Ezra Klein in The Washington Post.

@robertcostaNRO: Pres. Obama is pleasing his base w/ hardline talk. So is GOP about its determination. But, alas, this is (usually) a town of 11th hr deals

@dmarron: President rejects negotiating whether to raise debt limit. But he still has to negotiate how much, doesn't he?

How Obama is trying to change the debt ceiling conversation. "Obama is attempting to do more than merely win the debate — he’s first trying to change the terms of it altogether. Rather than argue over whether the debt ceiling should be raised to authorize more borrowing, Obama is instead arguing that Congress is voting simply to pay the bills that it has already racked up — a semantic difference, perhaps, but a very important one at the same time. In effect, Obama is trying to shift the burden of failure to Republicans in much the same way he did during the fiscal cliff debate." Aaron Blake in The Washington Post.

Think we can go over the debt ceiling and choose which bills to pay? Think again. "It’s the idea that the government can selectively pay some of its bills so that the nation doesn’t default on its debt payments — the doomsday scenario. It may sound appealing. But there’s also good reason to think prioritization might be unworkable." Brad Plumer in The Washington Post.

Ezra's note: That Brad Plumer piece is one of the most important things you'll read on the debt ceiling. Read it, bookmark it.

Geithner calls for action, ASAP. "The Treasury Department has officially set a deadline for raising the debt ceiling, albeit a loose one: Congress needs to act by mid-February or early March, or the country will face an unprecedented default...The country makes about 80 million separate payments a month, to seniors, soldiers, bondholders and thousands of others. Were Congress to fail to raise the ceiling, Treasury would miss an estimated 40 percent of those payments." Annie Lowrey in The New York Times.

And Bernanke says the debt ceiling is 'symbolic.' "Federal Reserve Chairman Ben S. Bernanke called on lawmakers Monday to “take care of their job” and raise the nation’s debt ceiling, warning that default could derail the still-fragile economic recovery. In a free-wheeling conversation at the University of Michigan’s Gerald R. Ford School of Public Policy, Bernanke said the debt limit has only “symbolic value” and advocated eliminating it." Ylan Q. Mui in The Washington Post.

@jbarro: Can the GSA start selling Republican staffers' office furniture to finance govt operations if we hit the debt limit?

Obama wants $1.5T in deficit reduction. What about the GOP? "President Obama made two things clear in his press conference this morning: He’s refusing to negotiate with Republican over the debt ceiling, but he’s willing to pass $1.5 trillion more in deficit reduction to replace the so-called “sequester” cuts and stabilize our fiscal trajectory...What’s less clear is how much deficit reduction that Republicans want out of all of this—expect that it’d be a figure significantly higher than $1.2 trillion sequester, which is left over from the 2011 debt-ceiling agreement." Suzy Khimm in The Washington Post.

Background: Why does the debt ceiling exist?

3 ways hitting the debt ceiling could increase the deficit. "The longer we’re over it, the greater the risk that the United States will have to stop paying out interest on debt, which constitutes default. So hitting the debt ceiling would cause a big spike in interest rates, which in turn means larger interest payments later on, increasing the deficit." Dylan Matthews in The Washington Post.

Conservatives are willing to hit the debt ceiling. Really. "GOP officials said more than half of their members are prepared to allow default unless Obama agrees to dramatic cuts he has repeatedly said he opposes. Many more members, including some party leaders, are prepared to shut down the government to make their point." Jim VandeHei, Mike Allen, and Jake Sherman in Politico.

How the conservative Heritage Foundation sees the debt-ceiling issue. "However, should a deal not be reached, defaulting on government debt would be a choice  by the Treasury, not an inevitability, according to J.D. Foster, an economist at the conservative Heritage Foundation...Foster, however, argues that the choice is simple: Severely cut spending to meet the government’s income." Allen McDuffee in The Washington Post.

How the AFL-CIO would do deficit reduction. "Just a month from tomorrow, we could hit the X date for default, followed two weeks later by the sequester deadline. But there’s been surprisingly little discussion  as to what Congress and the White House would actually propose to do about it, beyond the broadest contours of an agreement. A few groups have begun to lay out more specific proposals and demands for the next stage of budget negotiations — among them the AFL-CIO." Suzy Khimm in The Washington Post.

Poll: 20 percent name federal budget deficit as a top concern. Kevin Robillard in Politico.

BLINDER: In terms of danger, debt ceiling > fiscal cliff. "The debt ceiling is one of the worst examples of American exceptionalism...Only in America is there another law that might, and sometimes does, contradict the budget law: a limit on how much the government may borrow. If the debt limit exceeds the number implied by the budget, all is well. If it doesn't, Congress has passed two conflicting laws. In such cases, the minority party always has a little political fun before letting the debt limit rise. If not, we have a Walt Whitman Congress. ('Do I contradict myself? Very well, then, I contradict myself. I am large, I contain multitudes.')" Alan S. Blinder in The Wall Street Journal.

SILVER: Why Obama may try to drive a hard bargain. "Mr. Obama has less to lose this time around. That does not necessarily imply that he will not negotiate at all, but it does make his bargaining position more formidable." Nate Silver in The New York Times.

FIRESTONE: Chaos as legislative strategy. "The hard-right Republicans in the House aren’t interested in sitting at a long table with pencils and budget books; they want to set that table on fire, and burn to ashes all the compromises that long defined the two-party system...The use of chaos as a legislative strategy — and to 'manage' raucous members — is a new and explosive element in American politics, one that Mr. Obama doesn’t seem to want to acknowledge." David Firestone in The New York Times.

BARRO: Will Obama ruin the economy to ruin the Republicans? "By creating an object lesson of how unfit the Republican Party has become to govern, Obama can ensure himself a political “win.” But with a new recession sparked by a government payments crisis, the country would lose -- and Obama, whose second-term plans would be hampered by the need to manage yet another recovery, would lose, too." Josh Barro in Bloomberg.

Music recommendations interlude: Electric Light Orchestra, "Mr. Blue Sky," 1977.

Top op-eds

PONNURU: What the GOP doesn't understand about health costs. "Current policies elaborately disguise how much health coverage costs people. Because the federal government taxes wages but not health benefits, employers provide more of the latter and less of the former than they otherwise would. Most people have no idea how much money they have forgone in wages because of those benefits. They never see the money." Ramesh Ponnuru in Bloomberg.

MILBANK: Obama's not exactly Mr. Congeniality these days. "'I’m a pretty friendly guy,' President Obama said near the end of his White House news conference Monday afternoon. The claim might have been a touch more plausible if he hadn’t spent the bulk of the previous hour demonstrating just how adversarial he could be. Indeed, there was no precipitating event that led him to schedule the last-minute session in the East Room — lending credibility to the theory that he summoned reporters so he could bait Republicans." Dana Milbank in The Washington Post.

COHEN: Why the gun control debate isn't about guns, but government. "It’s about the government in two respects. The first is the conviction that guns are needed to protect Americans from their own government...The second way the gun-control debate is about government relates to crime — the belief that the government is either unwilling or unable to protect us." Richard Cohen in The Washington Post.

SUNSTEIN: How to resolve disputes, maybe even gridlock. "[M]inimalists and trimmers can make big mistakes. Insofar as it leaves important questions undecided, minimalism promotes uncertainty, which may make it impossible for people to plan. A minimalist approach to current fiscal debates may be a serious blunder. Even an imperfect answer may be better than no answer at all. Nor is trimming a philosophy for all seasons. Trimmers try to split the difference, so they may compromise with people who are wrong, confused or worse. If one side is way off the mark, it isn’t exactly admirable to compromise with it." Cass R. Sunstein in Bloomberg.

NOCERA: The foreclosure fiasco. "Pick a program — any program — that the Obama administration unveiled to help troubled homeowners over the past four years. Not one has amounted to a hill of beans." Joe Nocera in The New York Times.

SOLTAS: Economics is platinum, or what the trillion-dollar coin should teach us about money. "[T]he platinum-coin debate, for all its absurdity, was in fact packed with the basic principles of monetary economics. Here are five lessons that the trillion-dollar coin should teach us about how money really works." Evan Soltas in Bloomberg.

Envirowatch interlude: The Beijing "airpocalypse."

Is America for gun control?

American support for gun control rises. "Most Americans support tough new measures to counter gun violence, including banning assault weapons and posting armed guards at every school, according to a new Washington Post-ABC News poll. More than half of Americans — 52 percent in the poll — say the shooting at an elementary school in Newtown, Conn., has made them more supportive of gun control; just 5 percent say they are now less apt to back tighter restrictions...58 percent of Americans support the [assault-weapons] ban, which expired in 2004 after 10 years; 39 percent oppose it." David Nakamura and Jon Cohen in The Washington Post.

Will we get some gun control by executive order? "President Obama this week will embrace a comprehensive plan to reduce gun violence that will call for major legislation to expand background checks for gun purchases and lay out 19 separate actions the president could take by invoking the power of his office, lawmakers who were briefed on the plan said Monday...Actions the president could take on his own are likely to include imposing new limits on guns imported from overseas, compelling federal agencies to improve sharing of mental health records and directing the Centers for Disease Control and Prevention to conduct research on gun violence, according to those briefed on the effort." Michael D. Shear and Jennifer Steinhauer in The New York Times.

...But Biden's goals for gun laws are much more far-reaching than just that. "Vice President Joe Biden delivered his recommendations for reducing gun violence Monday, including proposals to require background checks for all gun sales, ban the sale of certain rapid-fire weapons and ensure that seriously mentally ill people can't acquire guns...He said he plans to move ahead with a broad effort that would include a push to strengthen background checks, restrict high-capacity magazines and ban certain semiautomatic weapons." Colleen McCain Nelson and Laura Meckler in The Wall Street Journal.

New York will be first state to tighten gun laws after Newtown shooting. "The measures, which would tighten the state's ban on assault weapons, would include a ban on ammunition magazines holding more than seven bullets, increased penalties and prison sentences for some gun crimes and an expansion of programs for the seriously mentally ill." Laura Nahmias in The Wall Street Journal.

Space in space interlude: ISS to get some bigger digs.

Will climate change make Seattle a limited-time travel offer?

The new tone of climate science: justifiably alarmist. "The natural conservatism of science has often led climatologists to be cautious in their pronouncements about global warming. Indeed, more than once they have drawn criticism for burying their fundamental message – that society is running some huge risks — in caveats and cavils. To judge from the draft of a new report issued by a federal advisory committee, that hesitation may soon fall by the wayside. The draft, just unveiled for public comment before it becomes final, is the latest iteration of a major series of reports requested by Congress on the effects of climate change in the United States." Justin Gillis in The New York Times.

2012 was a really bad year for alternative-energy investments. "Green energy investment fell in 2012 globally after hitting record levels the year before, driven in part by reduced activity in the United States, according to new data from Bloomberg New Energy Finance. The research firm reported Monday that overall investment was $269 billion, down from $302 billion in 2011 but still the second highest level ever, according to its database." Ben German in The Hill.

Will California drill, baby, drill? "California is sitting on a massive amount of shale oil and could become the next oil boom state. But only if the industry can get the stuff out of the ground without upsetting the state's powerful environmental lobby." Steve Hargreaves in CNNMoney.

You should go visit Seattle. Sea level rises make it sort of a limited-time offer. "Parts of Interbay, Georgetown, South Park, West Seattle, Harbor Island and Golden Gardens will be under water as the local shoreline creeps higher due to global climate change, Seattle Public Utilities predicts...From preparing for more intense heat to protecting the new downtown sea wall under construction to calculating the number of maintenance holes, pump stations and outfalls that will be under water in the new normal, city agencies are readying for sea-level rise caused by the amount of heat-trapping greenhouse gases, especially carbon dioxide, pumped into the atmosphere by human activities." Lynda V. Mapes in The Seattle Times.

How China and Mexico are leading the fight on climate change with environmental regulations. "A study of energy and climate laws in 33 economies showed 18 made “significant” progress in 2012, Globe [International alliance of lawmakers] said today in an e-mailed statement. The alliance, which brings together lawmakers from 70 nations, is meeting in London today and tomorrow to discuss ways in which governments can contribute to the international effort to contain global warming." Alex Morales in Bloomberg.

The efficient-market hypothesis makes fools out of all of us interlude: The cat who is "better" at stock-picking than you are.

HHS releases rules for Medicaid expansion

HHS publishes the Medicaid expansion plan. "The Obama administration released new regulations Monday to implement central provisions of President Obama's healthcare law, including its controversial Medicaid expansion...The 472-page regulation aims to streamline the process for determining who is eligible for the expanded Medicaid program, as well as the system for notifying applicants of eligibility decisions." Sam Baker in The Hill.

Gov. Jan Brewer of Arizona to expand Medicaid. "Arizona Gov. Jan Brewer (R) proposed expanding Medicaid under President Obama's signature healthcare law, a surprising move from a vocal critic of the White House...Arizona's program currently covers most people below the U.S. poverty level, meaning about 300,000 would gain coverage if the state expands Medicaid." Elise Viebeck in The Hill.

Slightly higher co-pays for Medicaid are coming. "States may soon have the authority to charge Medicaid patients higher co-payments, under new Affordable Care Act regulations proposed Monday. The new rule would set a maximum $4 co-pay for any outpatient services used by Medicaid patients who live below the poverty line ($11,170 for an individual). Up until now, the maximum co-payments have ranged between $1.30 and $3.90, depending on the actual cost of the service." Sarah Kliff in The Washington Post.

Adorable animals best ever interlude: This cat is AMAZING at the shell game.

The public policies which stand behind your investments

Will the SEC's new disclosure rules help startups or jeopardize investor protections? "The ads may start coming in the next few months through e-mail, on billboards, even via a passing reference on Facebook — companies looking to give you a chance to invest on the ground floor of a start-up that could hit it big. The tantalizing offers may be legitimate or pie-in-the-sky schemes, and that’s the messy reality that federal regulators must address as they craft new rules that will fundamentally change how private offers are marketed to potential investors." Dina ElBoghdady in The Washington Post.

Americans are raiding their own 401(k)s. "A large and growing share of American workers are tapping their retirement savings accounts for non-retirement needs, raising broad questions about the effectiveness of one of the most important savings vehicles for old age. More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans." Michael A. Fletcher in The Washington Post.

Bernanke: Let the bond buying roll on. "[He] said he still wasn't satisfied with the economy's progress, despite recent signs of improvement, and indicated that he plans to stick with the unconventional programs the central bank is using to lift output." Kristina Peterson and Michael Derby in The Wall Street Journal.

Federal regulators write JPMorgan up for bad risk management. "The Office of the Comptroller of the Currency and the Federal Reserve slapped the nation’s largest bank with two cease-and-desist orders that call for sweeping changes to the bank’s practices. There are no monetary penalties attached to either order." Danielle Douglas in The Washington Post.

Movies interlude: Toy Story with real toys.

Et Cetera

Military suicides hit a record high in 2012Jeremy Herb in The Hill.

Long read: Chris Maisano on student debt and social control in Jacobin magazine.

2012 saw $216b in increased regulatory costs. Why? Jim Tankersley in The Washington Post.

Sen. Marco Rubio, charting GOP immigration strategyJulia Preston in The New York Times.

Supreme Court Justice Clarence Thomas said something. But we don't know exactly what. Believe it or not, that's newsRobert Barnes in The Washington Post.

Want welfare? There isn't an app for thatDylan Matthews in The Washington Post.

Got tips, additions, or comments? E-mail me.

Wonkbook is produced with help from Michelle Williams.

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Sarah Kliff · January 14, 2013